EB Daily Market Report - Wednesday, July 31, 2024

Tom Bowley - July 31, 2024

Executive Market Summary

Futures were very strong overnight and our major indices gapped up strongly at the opening bell
We've seen a bit of follow through, we do remain beneath most key technical levels of resistance
Gold ($GOLD, +0.84%) continues its recent hot streak as a higher Volatility Index ($VIX) and a weakening dollar in July have aided the yellow metal
Crude oil prices ($WTIC, +4.34%) have jumped considerably, now trading near $78 per barrel
The 10-year treasury yield ($TNX) is down for the session, but has jumped slightly after the Fed left interest rates unchanged, as expected
Initial market reaction was subdued, but much may change over the next two hours; trading is typically quite volatile after a Fed announcement
Technology (XLK, +3.45%) is our best sector today, but it's recently broken below a topping head & shoulder neckline; a close back above 223 would be bullish, anything shy of that remains suspicious
Microsoft (MSFT, -0.94%) is down slightly, but well off its after market low in the 380s after reporting its latest quarterly results
Tonight, we'll get Meta Platform's (META, +2.17%) latest earnings results

Market Outlook

It'll be interesting to watch to see key technical areas of support and resistance after today's Fed announcement. For instance, here's the NASDAQ 100 on a weekly chart, currently showing a successful test of its rising 20-week EMA:

A loss of this moving average support on a weekly close would be very damaging technically.

Sector/Industry Focus

I'll be watching this afternoon, from 2pm ET to the close, looking to see which areas of the market benefit the most from the Fed announcement. This is simply to gather clues on what areas we might want to favor throughout the balance of Q3. It won't just be the rotation after 2pm ET today, however. I'll be watching over the next couple days to weeks, watching for that rotation too.

Here are how the various sectors are performing just PRIOR to the Fed announcement:

I'll look again at today's close to see what changed significantly.

ChartLists/Strategies

I might consider trading a stock I like here or there, mostly more value-oriented stocks. But overall, I'd remain very cautious. We might see the stock market rally short-term just because it would be relieved the Fed meeting is behind us. I don't believe, however, that market participants will hear the kind of news it wants to send growth stocks spiraling higher. Maybe I'm wrong. I think we our simply going to need time to allow our major indices to correct. As a result, I'll want to be more flexible and patient over the next 2-3 months.

I do like the rotation that we've seen since July 11th (into small and mid caps and more value-oriented areas) and expect more of that down the road. A closing breakout on the IWM above 225 could trigger more short-term bullishness in small caps and a quick trip to 235 (currently near 225).

Earnings Reports

Here are the key earnings reports for the next two days, featuring stocks with market caps of more than $10 billion. I also include notable companies with market caps below $10 billion. Finally, any portfolio stocks that will be reporting results are highlighted in BOLD. If you decide to hold a stock into earnings, please understand the significant short-term risk that you are taking. Please be sure to check for earnings dates for any companies that you own or are considering owning.

Wednesday, July 31:

META, MA, TMUS, QCOM, ARM, LRCX, BA, KKR, ADP, MO, GSK, TT, MAR, BBVA, MFG, AFL, MET, AIG, HUM, JCI, HES, COR, ALL, TAK, KHC, VRSK, IR, FICO, CTVA, GEHC, AEM, CTSH, GRMN, DD, VICI, CDW, AVB, AWK, EBAY, ANSS, WEC, CVNA, TEF, GIB, ES, WDC, PTC, MKL, FTS, CCJ, ENTG, WAT, UMC, TEVA, TS, CRBG, MAA, EG, BG, SUI, IEX, UTHR, GFL, MGM, CNH, HST, CLH, EDU, LECO, APA, PSN, SCI, TTEK, PAG, ALB, WING, KGC, CHRW, COKE, MUSA, RRX, QGEN

Thursday, August 1:

AAPL, AMZN, TM, SHEL, INTC, VRTX, COP, BKNG, REGN, ETN, BUD, CI, SO, ICE, MELI, TRI, CNQ, EOG, APO, BDX, MSI, ING, APD, COIN, GWW, MCHP, MRNA, TEAM, PRU, D, BCS, DASH, TRP, HLN, MPWR, CMI, AME, HSY, PWR, SQ, EXC, CVE, ED, XEL, DKNG, RKT, BIIB, MTD, RMD, BCE, ALNY, MSTR, TRGP, IRM, OWL, NET, ETR, RBLX, VTR, SNAP, AEE, GDDY, BALL, K, CTRA, APTV, AER, MT, LH, MBLY, CLX, GEN, RYAN, CE, NBIX, RGA, KIM, LNT, BIP, SIRI, AMH, XPO, AES, REG, CPT, ITT, HII, CUBE, OLED, TFX, FND, PCOR, APG, TWLO

Economic Reports

July ADP employment report: 122,000 (actual) vs. 154,000 (estimate)

July Chicago PMI: 45.3 (actual) vs. 44.3 (estimate)

June pending home sales: 4.8% (actual) vs. 1.1% (estimate)

Happy trading!

Tom